Carsten Brzeski, chief economist at ING, notes that the German ZEW index increased for the sixth consecutive month to 3.1 in April, from -3.6 in March, entering the positive territory for the first time since March 2018.

Key Quotes

“The current assessment component continued the trend of the last few months and recorded its seventh straight drop. German stock market’s gains of more than 5% during the previous four weeks, a weakening of the trade-weighted exchange rate by more than 2.5% since last summer as well as positive macro news from China have boosted financial analysts’ optimism on the German economy.”

“All backed by the Fed’s and ECB’s u-turns towards an easing bias.”

“Looking ahead, the main question is whether the significant slowdown could disappear almost as quickly as it came. The reversal of last year’s one-off factors, some encouraging recent evidence from global activity as well as continued solid domestic fundamentals have again brightened the outlook for the German economy.”

“A strong ZEW index alone will not solve the current mystery of what the real strength of the German economy actually is. In our view, however, it is another welcome green shoot. After a long series of downward revisions of German growth prospects, it could be time for first (tentative) upward revisions.”

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